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Stock Market: Fed Pulled Back (Video)


  • There's only one reason the market's up here with GDP down 50%.
  • The Fed.
  • They actually pulled back last week.
  • Looking for a portfolio of ideas like this one? Members of Nail Tech Earnings get exclusive access to our model portfolio. Get started today »

Technically the market (NYSEARCA:SPY) had a nice run. It might be a little stretched. Combine that with the Fed actually pulling back and coronavirus case numbers moving up, there might be some shorter-term risk starting to build. I think that will be a buying opportunity because the Fed's thinking we're bottoming.

Here's The Fed Numbers

The Fed reports the official change in their balance sheet weekly on Thursdays after the close. The Fed balance sheet saw it's first pullback since December.

Here's the numbers.

Total Change Per Week Per Day
2020-04-01 $4,768,238,706,062 $432,227,323,097 $86,445,464,619
2020-04-8 $5,060,118,230,012 $291,879,523,950 $58,375,904,790
2020-04-15 $5,319,687,288,500 $259,569,058,488 $51,913,811,698
2020-04-22 $5,492,341,792,900 $172,654,504,400 $34,530,900,880
2020-04-30 $5,534,933,870,549 $42,592,077,649 $8,518,415,530
2020-05-07 $5,583,378,870,000 $48,445,001,000 $9,689,000,200
2020-05-14 $5,806,783,512,000 $215,230,619,600 $43,046,123,920
2020-05-21 $5,917,721,273,900 $110,937,761,900 $22,187,552,380
2020-05-27 $5,910,125,715,200 -$7,595,558,700 -$1,519,111,740


Above you see the Fed had a rare pullback in their balance sheet. If you think about why the stock market's up while GDP is expected to be down 50%, it's because of the Fed.

So the changes in their balance sheet are important.

Coronavirus Case Numbers

WW New cases daily %incr
05/30/20 6150500 124102 2%
05/29/20 6026398 125473 2%
05/28/20 5900925 116304 2%
05/27/20 5784621 106475 2%
05/26/20 5678146 93879 2%
05/25/20 5584267 89812 2%
05/24/20 5494455 96505 2%


New case counts accelerated the last two days making it the highest new case additions since tracking the series. This is obviously going the wrong way.


Momentum in the market is very strong. We also talk in the video about strong comments from a Fed official. Still some risk is building for a shorter-term move. I discuss some simple indicators we're watching to be on the right side of the next market move.

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This article was written by

Elazar Advisors, LLC profile picture
Hi, I'm Chaim Siegel. I've run Elazar since inception. I've worked for big hedge funds as a trader, analyst, PM and water boy. 
Starting out I could make a mean straight black coffee. But ask me to add some sugar or milk though was a problem. So they got fed up and said, just give him some stocks to follow. That was in the 90s tech boom. Yeah. That worked out. 
So, now, mid-life crisis I enjoy second guessing the Fed, which is usually a good strategy. They are not traders, they have no risk discipline, they are having way too much fun with this QE-QT thing and because of their powerful position, are usually way too over-confident in their decision making which is a hint to bad decision making.
My customers have seen that I've been net net pretty good at consistently second guessing the Fed.
Our EPS estimates factor into Street numbers.
I've been on CNBC and a few other places.
But mostly I really just enjoy second guessing the Fed and keeping it simple.
Wishing you all continued success.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

All investments have many risks and can lose principal in the short and long term. The information provided is for information purposes only and can be wrong. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC, and their related parties harmless. All model portfolio trades are hypothetical to show direction, conviction and timing. Performance excludes all relevant transaction costs. Opinions given are at this moment and can change rapidly after this is published. Elazar and its employees do not take individual stock positions to avoid front running and other potential customer related issues.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (4)

RoseNose profile picture
Thanks Chaim @Elazar Advisors, LLC for following The Fed and reporting its activity. Surprise with the negative day. Would be interesting to know if it was 1 holding or many...
Any way, continue to play the I SPY game with us, good always to know your thoughts.
Rose :))
Elazar Advisors, LLC profile picture
GDP down 50%. i dont think its ever been down that much in modern history. So market near its highs is only one reason the Fed. so needs monitoring and respecting.

Thanks Rose, as always. Wishing you lots of continued success.
Thank you Chaim, very useful. How did you find Monday - as you said, the market still went up, but some sectors (incl. "bullish" chip stocks) were pretty weak. Do you find that the overall start of the week was positive?
I personally have a feeling of market resilience - despite all these negative news it is still drifting up... Obviously, things can change immediately.
Elazar Advisors, LLC profile picture
You're right on resilience. I think we can take a breather at some point soon though but generally im bullish.

As far as Monday i did mention that i thought more risk comes later in the week.
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